Erythropoietin and its receptor, critical for erythropoiesis, are expressed in the nervous system. Prior to death in utero due to severe anemia mice that lack the erythropoietin receptor have fewer neural progenitor cells and differentiated neurons are markedly sensitive to hypoxia, suggesting that during development erythropoietin stimulates neural cell proliferation and prevents neuron apoptosis by promoting oxygen delivery to brain or by direct interaction with neural cells. We find that neural progenitor cells express erythropoietin receptor at higher levels compared with mature neurons, that erythropoietin stimulates proliferation of embryonic neural progenitor cells, and that endogenous erythropoietin contributes to neural progenitor cell proliferation and maintenance. Mice lacking erythropoietin receptor were rescued with selective erythropoietin receptor expression driven by the endogenous erythropoietin receptor promoter in hematopoietic tissue but not in brain. Although these mice exhibit normal hematopoiesis and erythrocyte production and survive to adulthood, neural cell proliferation and viability are affected. Embryonic brain exhibits increased neural cell apoptosis, and neural cell proliferation is reduced in the adult hippocampus and subventricular zone. Neural cells from these animals are more sensitive to hypoxia/glutamate neurotoxicity than normal neurons in culture and in vivo. These observations demonstrate that endogenous erythropoietin signaling promotes cell survival in embryonic brain and contributes to neural cell proliferation in adult brain in regions associated with neurogenesis. Therefore, erythropoietin exerts extra-hematopoietic function and contributes directly to brain development, maintenance, and repair by promoting cell survival and proliferation independent of insult, injury or ischemia.